Italy’s government fired the opening salvo in what promises to be a fractious period of negotiations ahead of the 2019 budget, in a high- stakes process that’s already sparking investor concern.
As budget talks began in Rome on Friday, the two parties in the ruling coalition pledged to start implementing their bold spending plans next year, risking putting Premier Giuseppe Conte’s cabinet on a collision course with European Union partners. A spike in the yield of Italy’s 2.3-trillion- euro (USD2.7 trillion) public debt on Friday showed how closely markets will be following the talks.
The budget discussions will be key to gauging whether Finance Minister Giovanni Tria – a university professor with no previous political experience – will be able to withstand pressure from Conte’s political sponsors to deliver on their electoral promises. Tria has pledged to keep the deficit within the EU’s limit of 3 percent of gross domestic product.
“We have agreed on the economic and financial planning that will be presented in September,” Conte said in a statement after meeting with Tria, Deputy Premier and Five Star Movement leader Luigi Di Maio, Foreign Minister Enzo Moavero, Europe Minister Paolo Savona and Cabinet Undersecretary Giancarlo Giorgetti. Conte gave no details on budget figures.
Cabinet Undersecretary Giancarlo Giorgetti, a representative of the League – a partner in the ruling coalition – who was at the meeting, said in an interview with Italian daily La Stampa on Saturday that he is confident that both flat tax and citizen’s income measures will be included in the budget law.
The two measures will be developed in accordance with budget balance rules and common sense, he said, ruling out that the government will choose only one of the two: “both or nothing,” he was cited as saying.
The government coalition has advocated populist economic policies that could cost over 100 billion euros ($116 billion). The Five Star leader’s priority is the citizen’s income proposal aimed at helping the poor, while the League wants the flat tax and limits on immigration. Bloomberg
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